What Is Escrow?

Escrow is the process that buyers and sellers of homes use to complete the monetary and legal details of a sale. A neutral third party manages the escrow, called an “Escrow Officer,” who generally works for a title company. “Title” is the proof of ownership of a property. The title company ensures that all terms of the contract are adhered to before the sale is complete and money changes hands.

In order to successfully bring an escrow to close, the title company will:

Obtain a title report to ensure that the seller has the right to transfer ownership (title) to the buyer

Ensure that any previous loans on the property have been paid off

Acquire necessary loan and insurance documents

Confirm that necessary inspection reports are on file

Arrange for the buyer to sign all necessary paperwork to complete the close of escrow

When these details are complete, the Escrow Officer requests the funds to be released and instructs the title department to record the transaction at the County Recorder's Office, thereby closing escrow.